Ashtead Group launches new $500m share buyback scheme

Ashtead Group has begun a new share buyback program less than a week after the previous program concluded.

The London-listed construction equipment rental company said on Tuesday it would acquire a further $500m in shares between now and April 2024, having just completed a two-year project to acquire up to £1bn in shares last Friday.

It told shareholders that purchases would start at a “relatively low level,” with the amount purchased at specific times depending on factors such as corporate investment, net debt and the economic backdrop.

BP and HSBC also announced buybacks of $1.75 billion and $2 billion respectively on Tuesday, bringing the number of FTSE 100 companies that have executed or announced such schemes to 27 so far this year.

British blue-chip groups launched a record £55.8bn worth of share buybacks in 2022 – around 40 per cent of which will be from the oil and gas industry – as the global economy recovered from Covid-19 restrictions.

This was despite economic uncertainty gradually worsening throughout the year as oil and gas prices soared following the Russian invasion of Ukraine, exacerbating inflation and prompting central banks to raise interest rates several times.

“Whether the final 2023 buyback total will match or exceed last year remains an open question, and much may depend on the trajectory of the world economy in the second half, but we are certainly on track for a fast start.” Russ said. Mold, investment director at AJ Bell.

Ashtead is known for leasing machines such as forklift trucks, cranes and scaffolding. Ashtead’s revenue has exploded in recent years due to acquisitions and a rebound in construction activity.

Two months ago, the company raised its annual profit forecast after a solid performance in the third quarter, when sales rose 22 percent and pre-tax profit jumped a third.

On a nine-month basis, the company’s rental revenue grew by a quarter thanks to continued trading in the US, where it operates as Sunbelt Rentals and derives about 90 percent of its profits.

Chief executive Brendan Horgan said, “Our business is performing well with clear momentum in strong end markets, bolstered by the surge in mega projects and recent US regulatory action.”

Last August, US President Joe Biden signed into law the Inflation Reduction Act and the CHIPS and Science Act, which together comprise about $650 billion in government funding and incentives for various projects.

Horgan added: “We are in a strong position, with operational flexibility to capitalize on the opportunities arising from these strong markets and the ongoing drivers of structural change, including supply chain constraints, inflation and labor shortages. ‘

Ashtead Group Shares were 1.8 per cent higher at £46.60 late Tuesday afternoon and have grown by about 117 per cent over the past three years.